After a long battle to pay off $45,000 in the late '90s, I never wanted to be in debt again. Well, I am. Only this time, we owe more than $56,000.

It hurts so much to write that. It happened so suddenly. But the truth is that I should have seen it coming. Before I get into the details, here's a brief overview of what we owe:



Interest rate

Washington Mutual HELOC



American Express









What went wrong this time?
I'm incredibly embarrassed to be in this position. And I'm not using "we" or "us" in this case because my wife deserves no blame for our predicament. I got my family into this mess. Again.

As I look back, I'm both encouraged and disheartened. It all began last winter. I had been given a broader opportunity to write for the Fool, which I basked in. I had wanted to be a full-time writer for as long as I can remember. I just lacked the pure talent of others.

When I tried to write in college, I got as far as the newspaper. When I took a creative-writing class, I was practically laughed out of the room. (Talk about embarrassing.) More than 15 years later, after a long career in public relations -- which, in truth, was just a way to stay within spitting distance of a writing career -- I found what I had long sought, thanks to the very tolerant editors here.

And I let that blind me. PR, you see, pays well. Since I was pretty good at it, I got paid a lot. Fully embracing Foolishness, on the other hand, meant a substantial pay cut. As if I cared. This was, after all, me living a dream. I kept to my mantra: How can I possibly put a price on this?

Avoiding the inevitable
Unfortunately, I failed to adjust our spending to meet our income and, worse, slipped back into the old routine of paying attention to day-to-day financial duty only when it suited me. That was stupid, and costly. For example, we've been late paying one credit card three times over the past 12 months, resulting in hundreds in late fees and a punishing interest-rate increase.

We weren't late by much -- usually just a day or two. Still, I should've seen this coming. I've studied the credit industry enough to know that lenders use computers to track payment histories and assign rates. There's no human judgment involved. If there were, mortgage holders such as Washington Mutual (NYSE:WM), Wells Fargo (NYSE:WFC), Bank of America (NYSE:BAC), or Golden West Financial (NYSE:GDW) would never foreclose on a loan. But of course they do.

Shocked into action, I finally sat down to create a three-point plan for paying down what we owe:

  • Get better credit deals: A balance transfer from a cash-back card charging 29.99% annually to a 2.99% loan offered by Citigroup has already saved me hundreds in interest and should save thousands over time. (The rate is locked for the life of the loan, so long as we maintain a timely payment schedule.)

  • Live below our means: We're once again tracking all of our bills, eating out less, and cutting unneeded services. We're also using coupons -- including the online variety -- and taking advantage of low-cost entertainment for date nights, including free babysitting from my mother-in-law.

  • Set a big goal: Finally, as a forcing mechanism, we have created a six-year plan to take a big trip overseas on the cheap, as we did last time.

The Foolish bottom line
Believe me, there is no joy in airing my dirty laundry here. But if you're kind enough to read what I have to say, then I ought to be gutsy enough to give you the truth, no matter how embarrassing that may be. And I hope that being honest here might help some of you avoid getting into a similar predicament, or give you some encouragement if you're already there.

I believe I'm finally on the right path. I'm arming myself with a big goal and a specific spending plan. And we're finally striving to live well below our means. If you're facing similar circumstances, or just want some Foolish advice for making the most of your moola, may I suggest Motley Fool GreenLight? Our new personal-finance newsletter service will feature the best tips Fools have to offer, and it's risk-free to try. Click here to learn more without spending a dime.

The article was originally published on June 21, 2006. It has been updated.

Fool contributor Tim Beyers is lucky to have a family that puts up with his occasional stupidity. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. Get the skinny on all of the stocks in his portfolio by checking Tim's Fool profile. Bank of America is an Income Investor selection. The Motley Fool's disclosure policy is always in the black.